based upon statutes containing special provisions. In order to justify such a construction, the intention of the legislature to create a primary conditional and immediate liability not dependent upon the failure of corporate assets nor collateral to the liability of the corporation should be apparent.1

But, generally, proceedings against the corporation will be excused where it can be shown that they are impossible or would prove nugatory, whatever the wording of the statute.2 Under the National Bank Act the time and the necessity for enforcing the double liability of stockholders therein provided are matters resting largely within the discretion of the comptroller of the currency.3 Where, as in Alabama, the statute gives the remedy only upon dissolution of the corpo

1 In Mfg. Co. v. Bradley, 105 U. S. 175, a provision of the charter made "members of the company jointly and severally liable for all debts and contracts made by the company until the whole amount of the capital stock fixed and limited by the corporation" is paid in. It was held that upon a bill being filed against the corporation for the collection of a debt the shareholders might properly be made parties in order to avoid a multiplicity of suits, and upon the further ground that the shareholders were immediately liable under such provision of the charter. In Walter v. Coe, 110 N. Y. 109, it was held that under the latest New York statute on the subject (Act of 1875) a stockholder may be sued before judgment against the corporation, but cannot be held liable until after such judgment. See also Young v. Brice, 18 N. Y. St. Rep. 945; 3 N. Y. S. 123. 2 Shellington v. Howland, 53 N. Y. 371; State Sav. Ass'n v. Kellogg, 52 Mo. 583; Dryden v. Kellogg, 2 Mo. App. 87. See Ansonia, etc., Co v. New Lamp, ete., Co., 53 N. Y. 123; s. c. 91 U. S. 656; Fourth Nat. B'k v. Franklyn, 120 U. S. 747; Paine v. Stewart, 33 Conn. 516; Munger v. Jacobson, 99 Ill. 349, holding that even where the statute requires a suit to enforce a statutory liability such suit need not be delayed until the corporation property has all been applied to the payment of debts, if it be clear that such property will be insufficient to pay everything; Flash v. Conn, 109 U. S. 371; Kinkaid v. Doninelle, 59 N. Y. 548; Patterson v. Lynde, 112 Ill. 196. The appointment of a receiver does not suspend, and need not delay the action. Mason v. N. Y., etc., Mfg. Co., 27 Hun, 307. The insolvency of the corporation and the fact that it has ceased to do business and made an assignment for the benefit of creditors are clearly sufficient to excuse delay in bringing suit against the stockholders. Mason v. Lewis (Ohio), 17 N. E. Rep. 558.

3 Casey v. Gibson, 94 U. S. 673; Kennedy v. Gibson, 8 Wall. 498; Strong v. Southworth, 8 Bin. 331; Nat. B'k v. Case, 99 U. S. 628.

See McDonnell v. Ala. G. L. Ins. Co., 85 Ala. 401.

ation it is held that for that purpose, dissolution exists when the corporation has debts with no assets, and has ceased to act and exercise corporate functions or the enterprise which it was formed to prosecute has come to an end.1

§ 905. Demand upon corporation.-Where stockholders are made primarily and co-ordinately responsible, and the right of action accrues against both at the same time, no previous demand on the corporation whatever is necessary, prior to proceeding against the shareholder, except in those cases where a demand ripens a cause of action into a right of action.2

§ 906. Relation between stockholders and corporation with respect to statutory liability.-The stockholders, as between themselves and the corporation, are sureties or guarantors, while the corporation is the principal debtor; and while their liability to creditors is primary and not secondary, yet courts will so far take notice of this internal relation as to allow a discharge of a debt pro tanto by one to be set off in an action against another. And evidence admissible to establish a demand against the corporation will be received where the action is brought against the stockholder.5

1 Penniman v. Briggs, Hopkin's Chan. 300; Perry v. Turner, 55 Mo. 418; Central Agric., etc., Ass'n v. Ala., etc., Ins. Co., 70 Ala. 120; State Savings Ass'n v. Kellogg, 52 Mo. 583; Bank of Poughkeepsie v. Ibbottson, 24 Wend. 473; Slee v. Bloom, 19 Johns. 456.

2 In Mitchell v. Beckman, 64 Cal. 117, a commercial banking corporation in which the defendant was a stockholder and plaintiff a depositor, had closed its doors whereupon plaintiff brought his action to enforce the individual statutory liability of defendant for the unpaid balance in the bank at the time of the suspension. It was held that the closing of the doors of the bank dispensed with a demand upon the corporation before bringing the suit, although the bank's by-laws expressly required a previous demand before paying balances due depositors. See Sonoma Val. B'k v. Hill, 59 Cal. 107.

3 Prince v. Lynch, 38 Cal. 528.

San. Jose, etc., Sav. Bank v. Pharris, 58 Cal. 380.

5 Borland v. Haven, 37 F. 394.

§ 907. The statutory remedy cumulative. The statutory remedy against stockholders does not exclude the equitable remedy to enforce the payment of unpaid assessments on the stock. In the federal courts, in New York and perhaps in one or two other states, the only remedy given is equitable.2 But whether a creditor may file a bill in equity on behalf of himself and all other creditors to enforce the additional liability to that having relation to unpaid capital has not, so far, been definitely settled.

3

Convenience and the avoidance of a multiplicity of suits it seems should be a strong argument in favor of allowing all the parties similarly interested to be brought before the court and a full adjudication upon the claims and liabilities had in one action.

4

Upon this ground as well as upon others, courts of several states and the United States have not only entertained jurisdiction of actions brought in the form of a creditor's bill in such cases, but to restrain separate and individual actions at law when the equitable jurisdiction has once attached by the filing of a suit by one or a portion of the creditors, and to bring all proceedings into one suit and all parties to one tribunal.5

In a case involving directly the jurisdiction to this

1 Harmon v. Page, 62 Cal. 448.

2 Andrews v. Bacon, 38 F. 777; Wellington v. Cont. & C. I. Co., 52 Hun, 408. See also, Guadaloupe, etc., Min. Co. v West, 70 Tex. 391.

3 The reasoning in Harmon v. Page, supra, as strongly supports concurrent jurisdiction in the one case as in the other.

4 Pfohl v. Simpson, 74 N. Y. 137; Bank of U. S. v. Dallam, 4 Dana, 575; Andrews v. Bacon, 38 Fed. Rep. 777; B'k of Poughkeepsie v. Ibbotson, 24 Wend. 479; Masters v. Rossie, etc., Min. Co., 2 Sandf. Ch. 301; Van Hook v. Whitlock, 3 Paige, 409; Matthews v. Albert, 24 Md. 527; Norris v. Johnson, 34 Md. 489; Thebus v. Smiley, 110 Ill. 316.

Erie Ry. Co. v. Ramsy, 45 N. Y. 637; Pfohl v. Simpson, 74 N. Y. 187; Andrews v. Bacon, 38 Fed. Rep. 777; Guadaloupe, etc., Ass'n v. West, 70 Tex. 391. It is now the settled rule in New York that the action must be in equity against all stockholders similarly situated. Wellington v. C., etc., Imp. Co., 52 Hun, 408. See Tabor v. Mfg. Co., 11 Col. 419.

extent, the court said:" It is in cases where many persons have claims, and are prosecuting or about to prosecute them at law against one defendant, or against a class of defendants, or against a fund, liable in equal degree to all those persons and to others, and thus there arises the fact, or the probability, of a multiplicity of actions, that this jurisdiction of equity attaches." And it is immaterial whether the right of action arises from general principles of law, or from particular provisions of constitutions, or statutes, if the right exists, and is likely to be used so as to produce mischief."

But there is no doubt of the general right of any creditor to proceed with diligence; and if the amount of his claim and the exigencies of the case affecting his interest, justify it to resort to and employ all legal remedies within his reach, either against one stockholder or against every solvent stockholder within the jurisdiction of the court. The statute by making the remedy joint and several clearly gives that right, and neither the shareholder sued, nor any other creditor would have any just ground of complaint in such case for the amount recovered would only be the proportion of the shareholders' liability fixed by law in favor of the particular creditor, and would not affect either the right or the remedy of the other creditors against the same party.

§ 908. Benefits purely personal to creditors.-The benefit of the provisions of statutes and constitutional provisions, securing to creditors the individual liability of

1 Pfohl v. Simpson, 74 N. Y. 137.

2 This right is recognized in Weeks v. Love, 50 N. Y. 568, and cases are there cited to the effect that there may be an equitable action against all such stockholders, and that in a proper action the court may provide for the taking an account enforcing the liability of all of them for the benefit of all the creditors entitled to share in the fund to be collected from such stockholders.

shareholders may be waived by contract.' But it cannot be affected or controlled by any inter se arrangement of the shareholders. A provision in the articles exempting the members from the statutory liability does not protect them; it having no more effect than similar provisions in articles of copartnership.2

But directors are chargeable with notice of such provisions, and where they exist cannot hold the stockholders on their statutory liability for indebtedness held by them against the corporation.3 A general exemption from liability in a contract will be construed to refer to the statutory liability, and not to that for unpaid subscriptions.*

So far is this additional remedy personal and independent of the contractual relation of the corporation with its shareholders and creditors that a receiver, invested with all the estate and property of an equitable interest of an insolvent corporation, could not employ it for the benefit of creditors. The appointment of such receiver would not preclude the creditors from enforcing the liability directly against the shareholders by a separate proceeding.5

1 French v. Teschemacker, 24 Cal. 518; Robinson v. Bidwell, 22 Cal. 379: Basshor v. Forbes, 36 Md. 154; Brown v. Eastern Slate Co., 134 Mass. 590; Re Athenæum, etc., Soc., 3 De. G. & J. 660; Hallet v. Merchant Traders', etc., Ass'n, 13 Q. B. 960; Durham's Case, 4 Kay & J. 517. See also, Shelford on Joint Stock Companies (2d. London Ed.), 4. Such exemption may be absolute or only partial. In re State Fire Ins. Co., 1 Hem. & M. 457; Lord Talbot's Case, 5 De G. & Sm. 386. See also Reid v. Allan, 4 Exch. 326. Compare Sunderjand, etc., Ins. Co. v. Kearney, 16 Q. B. 925; Pedell v. Gwynn, 1 Hurl. & N. 590; Hess v. Wertz, 4 S. & R. (Pa.) 361.

2 Sullivan v. Campbell, 2 Hall (N. Y.), 271; Hess v. Wertz, 4 Searg. & R. 356; Greenwood's Case, 3 De G. M. & G. 459; Bromley v. Elliott, 38 N. H. 287. 3 In re Worcester, etc., Co., 3 De G. M. & G. 180.

Preston v. Cinn., etc., R. Co., 36 F. 54.

Arenz v. Weir, 89 Ill. 35; Farnsworth v. Wood, 91 N. Y. 308; Dutcher v. Marine Nat. B'k, Blatchf. 435; Bristol v. Sanford, 12 Id. 341; In Jackson v. Allen, 20 Blatchf. C. C. 525, it was held that a receiver of "all the estate, property and equitable interests" of an insolvent banking corporation, created by